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How To Take Control Your Finances (Even Now)

The 2020 pandemic has changed nearly everything about life as we knew it. Some days it can feel like everything is out of your control, and the uncertainty and inability to predict or plan your future can be overwhelming. 

At Pro Wealth Management, one of our primary focuses is to alleviate our clients’ financial stress by providing strategic financial guidance to help them reach their goals. 

We strongly believe that action is the antidote to anxiety. So while you may feel like so many aspects of your life are out of your control, this note will show you some actionable tips for the things that you can control.  It will help you where to be proactive about your financial health and wellbeing. Here are a few things you can do today. 

Sound mind, sound decisions

It all starts with the right mindset. The changes to your daily life and routine mean that you need to take extra care of your mental health. 

When you are in the right mindset, you will be able to make better, smarter decisions. 

There are plenty of actions we can take to try to make the best of a crazy situation - reducing stress, increasing joy, and training our brains to think positively:

  • Connect with friends and loved ones outside your immediate family

  • Maintain (or begin) a sustainable exercise routine

  • Fill your day with work or projects

  • Embrace the special time you have with those under your roof

  • Get regular sleep and take time for yourself

  • Start to visualize what you will do when you have more freedoms

Once you are in the right mindset you can then begin to tackle your financial to-do-list. 

Evaluate your spending

Odds are that the pandemic has thrown a wrench in your spending plan. While some households are spending less, some have lost income and would benefit from a revised household budget—at least until their income is more predictable and stable. 

While phased reopenings are beginning, it may take many months before we resume our normal activities. For now, it’s best to do what you can to rein in your spending.

Consider these conscious spending tips:

  • Cut unnecessary spending like multiple subscriptions and other non-essentials.  How often do you use them?  Do you really need them?  Would that money be better spent elsewhere?  

  • Avoid overbuying at the store. To do this, simply take stock of what you have, seek out sale items and store brands, and always shop with a list.  Lots of food often gets tossed because of overbuying.

  • Make a new budget that supports your current situation. Looking at the numbers allows you to acknowledge where you are and adopt a realistic and conscious spending plan.

Maintain your savings strategy

We realize that for many American families, pre-pandemic savings strategies may be hard to maintain in the short term. As you map out a new budget, consider your short- and long-term savings goals, and adjust accordingly.

If you’ve lost income and are unable to continue to shore up your savings and emergency fund, focus on the spending reduction tips above. If you will receive a stimulus check, try to put it swiftly into your emergency fund for expenses still to come.

If your household income and your life circumstances remain stable and positive, consider yourselves fortunate, and don’t stop adding to your emergency fund and other savings goals. New car tires, a plumbing emergency, or a child’s emergency room trip can happen anytime, even to the homebound.

Call your creditors

To reduce your monthly bills, especially if you are having trouble paying your bills, contact your creditors to see what assistance they can offer during this time.  They will likely understand because they know a lot of folks are in the same situation and would pay their bills if they could. 

Be sure that you look into these potential options:

  • Federal student loans are in forbearance (including interest) through September 2020 

  • Many mortgage lenders can offer you temporary relief. But be sure you know the consequences of accepting a mortgage deferral or forbearance.

  • Some credit card companies like American Express and Capital One are suspending payments and interest during COVID-19 

  • Some utility companies, including Comcast, PG&E, AT&T, Hyundai and Duke Energy are among the businesses offering to support those in need

  • The CARES Act now allows you (through April 2021) to obtain a weekly free credit report online from all three major credit bureaus. It’s a good idea to review your reports at least annually, to dispute errors or identify fraudulent activity.

If you can, keep chipping away at your debt. But if not, do what you can to limit any added debt like new credit cards or loans. If you have to take on new credit cards, personal loans, or home equity lines of credit, be sure they are federally subsidized. We invite you to ask us for guidance here if needed, as there are potential tax implications.

Keep investing if you can

Market volatility happens. This we know is true. Yet knowing it is an entirely different experience from living it and watching your nest egg drop in value. One thing you may be surprised to learn is that as of late May 2020, markets are down only about five percent since March of this year. The pandemic’s toll is not necessarily tracking losses in the market, though we expect some volatility for the foreseeable future. 

It may feel rational on many levels to believe it’s smarter to get out of the stock market now and try to minimize potential losses. But statistics paint a different picture. Many who sold off their remaining assets (when the market was down) in 2008-09 lived to regret it, as the market not only regained all lost ground but grew substantially over the last 10 years. 

Before you decide you want to sell investments, call us for a chat. Here’s our overall advice on this topic:

  • Take a look at your current investment plan; are your allocations positioned to meet your long-term goals?

  • What is your age and retirement time horizon?

  • Are there changes that should be made to reflect your time horizon?

  • Can you rebalance to help put your portfolio in a better position?

While sometimes it’s not easy, focusing on statistics, plans, and patterns rather than emotion will help you ride out the storm.  Gaining control is a high impact strategy.  By taking action, you’re more likely to alleviate some personal finance anxiety, increase your positive feelings and gratitude in the present, as well as hope for a good future.  Doom and gloom would love to take over your life and could do so unless you become proactive and fight them.

If you are a client of ours today, rest assured that while you’re doing your part to manage your present wealth, we remain focused on keeping you on track to meet your long term financial goals.

Call us today and let us take some of the load off of you. It’s what we do best.